The European Union needs to intensify its efforts to establish a capital markets union so that hundreds of billions of euros of private capital can be accessed to help fund the region's green transition, Deutsche Bank AG CEO Christian Sewing said.

Speaking at the Financial Times Global Banking Summit in London, the head of Germany's largest lender said public debt and bank financing would not be enough to meet projected green financing needs. Europe is estimated to require €480 billion of additional investment in green infrastructure annually in the coming years if it is to meet its 2030 emissions reduction targets.

"The green [transition] in Europe will not happen without the European Capital Markets Union — people need to understand that," Sewing said.

German budget crisis

Sewing's comments come as the German government deals with the fallout from a recent court ruling that blocked Berlin's plans to reallocate €60 billion of unused pandemic funds toward green initiatives and industry support.

"[The court's decision] is the big chance for Germany to use this situation as a catalyst to think about other streams of financing," Sewing said. "We should really make sure that we step up in Europe and also in Germany to call for the European Capital Markets Union."

The Capital Markets Union is a plan to create a single market for capital in the European Union and affiliated countries. The aim is to get investments and savings flowing across the EU so that it can benefit consumers, investors and companies, regardless of location.

'Bold decisions'

"There is so much private money that can be used in a far better way than public debt in order to finance exactly those investments which we need to do," Sewing said.

The European Court of Auditors (ECA) warned in June that the EU is in danger of failing to meet its 2030 climate change targets due to uncertainty over sufficient funding for the projects and infrastructure needed to meet the goals. The ECA highlighted a lack of funding from the private sector particularly as a problem.

"If you are in a difficult situation, [take] bold decisions," Sewing said. "Let's go for the European Capital Markets Union, let's make sure that we are deepening the capital markets in Germany in itself, let's make sure that we are working more together with the government in Berlin and Brussels on public-private partnerships."

M&A

Sewing also called for more work toward a banking union in Europe that would allow greater consolidation in the sector. Different banking regulations across the EU's markets make large-scale bank M&A "hard to think about" from a cost-benefit analysis, the CEO said.

"I believe that Europe['s banking sector] needs a kind of consolidation going forward, but you also need the structural preconditions for that," Sewing said. "For broader consolidation, I don't see yet the regulatory foundation."